Apple Inc (AAPL)

She does not like consumer products tech companies because of how fast the consumer shifts their preferences. She is always watching it, however.

There is more clarity than there was 2-5 years ago, when it was thought that they had to reprove themselves on innovations. They now have new products coming such as the new watch and Apple Pay. He thinks there is still a lot of growth and a long runway. Have become much more shareholder friendly. No company globally produces the amount of free cash like this company. His guess is that the 1.44% yield will probably close to double in April.

This has become the biggest holding in his portfolio, and he trims back when it becomes 5%-6% of the portfolio. He thinks this is one of the greatest companies in the world and there is still a long runway of growth potential.

He would separate the company from the stock. A lot of people love their products and use their products and are a very strong fan base. They dominate profitability and the smart phone industry despite that their market share is only around a 5^th globally. He would argue the reason this has been so successful in the last 10 years, is because somewhat uniquely among large cap tech companies, Steve Jobs had the ability to bring together the engineering department, product management department, sales/marketing department, and get them to bash their heads together. This got compelling products out really, really quickly and only focused on products that made a difference. With his passing, his fear is that this company looks a lot like most other large tech companies, where there are all sorts of good ideas percolating, but the real challenge is to get those ideas to market very, very quickly. If he owned, he would be very tempted to take a profit.

(A Top Pick April 10/14. Up 75.02%.) This is now at about an 8%-9% weighting in his clients accounts. It is still cheap at 15X this year’s earnings. Thinks that Apple Pay is going to be a huge success. (See Top Picks.)

(A Top Pick Oct 14/14. Up 30.64%.) Has almost $30 a share in cash and is going to earn about $8.60-$9 this year. He is optimistic that they will again find a way to create a category where others have tried and have not done so well, such as the watch. Dividend yield of 1.47%.

One of the great growth stocks of our age. It is actually not expensive. If you strip out the $30 per share in cash they have on their balance sheet, it is only trading at about 12.5X PE. This is still a cheap value stock and is growing at above average rate. Yield of 1.5%.

Write Covered Calls? You could, although he has never thought of doing it. You would be getting some pretty nice premiums. This is a conservative way of playing it. Don’t forget that whenever you are doing a Covered Call, you are effectively reducing the price of the stock by the value of the Call. Just make sure you know what you are doing because Covered Calls are not difficult to put on, but they get really interesting when there is volatility and you want to take them off. Where a stock price is $100, he looks for an ETF where the Strike price is $100 or $105. Some people will say that you should only go out 1 month or 2 because you will get better yield, because you can do it 2 or 3 times over 6 months. He prefers going out 6 months as he likes more downside protection. It also depends on ex-dividend dates.

Thinks there are better opportunities with some of the companies that have not been so high flying. There are some big US technology companies that are undervalued relative to the expectations that are built in Apple.

You can’t say anything negative about this company. Chart shows higher highs and higher lows. At a new all-time high today. Technology tends to do well from October through to January, but this one kind of bucks that trend as it can do well even in the summer. This has been a massive growth stock.

If you have a view that you like the company and that the growth rate is good, then you hold on. The iWatch is coming out.

Half the people think the iWatch is going to be a flop and the other half thinks it is going to be one of those sneaky hits that people just can’t live without. He thinks the stock will trade up because 1) most of the analysts are behind the ball on this and they’ll all raise their targets next week, and he thinks it trades up to $120 in the 1^st quarter. The iWatch is coming out in early April, later than everybody expected. A very defensive name to him.

You’re going to get some volatility. As the holiday sales get announced, there is going to be some people that think they are great numbers and others that don’t. From a financial point of view, the company is in great shape. Strong balance sheet and have lots of cash. They are buying back stock and they have a dividend. He would wait for the stock to pull back below $700.

They are gaining traction in the lower income emerging market countries, so the lower cost phones in the high growth regions strategy is going well. They are continuing to innovate. With Apple Pay and iWatch coming out he doesn’t know when it will be profitable, but they are continuing to innovate. He likes that they have $120 billion in cash and they can’t spend it fast enough.

(A Top Pick Jan 29/14. Up 52.46%.) Trading at 13.8X what he expects to earn by September 2015. The iPhone 6 was probably one of the most successful product launches of all time. A very high margin piece of business. The mix for this company is very favourable, because the iPhone is a very high margin product, and as it becomes a larger and larger percentage of the total, their gross margins of the company will rise. He expects over 40% of gross margin will lead to a surprise on the upside in terms of earnings. Producing an enormous amount of cash and most of it they are banking. They really can’t keep up with the amount of cash coming in, although they are paying a very fine dividend and are buying back about 6% of the float per year. The iWatch and the ApplePay are the innovation side. Yield of 1.76%.